On November 23, 1998, attorneys general of 46 states, who had sued five of the largest tobacco companies in the United States (Philip Morris Inc., Brown & Williamson Tobacco Corp., R. J. Reynolds, Lorillard Tobacco Company, and Liggett & Myers) to recover costs associated with treating smoking-related illnesses, entered into an agreement to collectively settle their claims in exchange for monetary and other relief. Four states (Florida, Minnesota, Texas, and Mississippi) settled their tobacco cases separately.
Pursuant to the written settlement by the parties, referred to as the Master Settlement Agreement (MSA), the “participating manufacturers” agreed to pay substantial sums to the 46 “settling states” and to fund a national foundation devoted to the interests of public health, as well as to make substantial changes in their advertising and marketing practices and corporate culture, with the intention of reducing underage smoking.
According to the Master Settlement Agreement, the participating manufacturers agreed to pay the settling states in excess of $200 billion over a 25-year period, to fund a foundation to support programs that reduce youth tobacco-product usage, and to fund educational programs to prevent diseases associated with the use of tobacco products in the United States. Pursuant to the Master Settlement Agreement, the tobacco companies also agreed to not target the youth market in their advertising, marketing, or promotion of tobacco products; to discontinue the use of cartoons in their advertising, promotion, packaging, or labeling of tobacco products; to eliminate outdoor and transit advertising of tobacco products except in adultonly establishments; and to discontinue payments to persons and organizations in exchange for promoting tobacco products in film and live entertainment.
The participating manufacturers also agreed to limit their brand-name sponsorship by not sponsoring concerts or events in which a significant number of the intended audience or participants are youths and by banning the distribution of free samples and gifts based on proof of purchase to underage persons. The MSA further prohibits participating tobacco manufacturers from opposing states’ legislation intended to reduce youth access to tobacco products and the incidence of youth consumption of tobacco; from participating in trade associations whose actions are contrary to the Master Settlement Agreement’s provisions; and from making any material misrepresentation of fact regarding the health consequences of using tobacco products, including additives, filters, paper, and other materials.
The MSA cases, unlike previous lawsuits against the tobacco manufacturers, succeeded to settlement because of a unique theory of recovery proposed by Dr. Ray Gangarosa, research fellow at the Center for Ethics, Emory University, to the lawyers who initiated the first state suit against the tobacco companies on behalf of the state of Mississippi. Although Mississippi settled its case separately for over $3 billion, its suit began the process that led to 46 state actions and the resulting Master Settlement Agreement. Previous lawsuits by individual plaintiffs failed because the juries in those cases applied the theory of assumption of the risk— that is, the smokers knew the risks and voluntarily began to smoke and continued to do so—and/or because the plaintiffs could not prove that smoking had in fact caused their cancer. Dr. Gangarosa’s theory was that states or public hospitals could bring their own suits to recover their costs of treating disease and illness caused by cigarette smoking, and a direct action by the state would not be subject to the assumption-of-risk and cause-in-fact defenses that defeated the individual plaintiffs’ cases.
Although adolescent cigarette use reportedly declined after the Master Settlement Agreement, the New England Journal of Medicine reported in August 2001 that studies showed tobacco companies were continuing to promote cigarettes to youths and that the amounts spent by the tobacco companies in advertising certain brands popular to young people had actually increased since the Master Settlement Agreement’s signing. In fact, several states have sued the tobacco companies for violating the MSA’s provisions.
The New England Journal of Medicine also reported in October 2002 that the settling states were not spending adequate amounts of their tobacco settlement funds on programs to control tobacco usage by youth, but were in fact using portions of the monies to balance their budgets in bad economic times. Such disappointment with the Master Settlement Agreement’s implementation has prompted many to call for jurisdiction to be given to the Food and Drug Administration to regulate tobacco products. In fact, legislation (H.R. 1097) supported by all major health organizations is currently pending in Congress to do just that.